When a serious employment issue is brought to the employer's attention, it becomes incumbent on the employer to promptly and thoroughly investigate. In certain circumstances, the employer is under a statutory duty to investigate. In other circumstances, the “obligation” is less clear. In any event, a failure to investigate can have legal implications and adversely impact a defence.
The duty to investigate was recently discussed in Ludchen v. Stelcrete Industries Ltd., 2013 ONSC 7495 (CanLII). The employer terminated the plaintiff for just cause.
The decision to terminate was made by the Human Resources Manager and the General Manager. Neither had first hand knowledge of the alleged incident. The information regarding the alleged comments came to their attention from a private investigator who had been hired to work “under cover” to investigate alleged drug use at the facility.
The Court noted that no investigation was conducted. The decision to terminate was made and a letter issued:
On January 17, 2008, in front of a number of employees, you angrily denounced a recent operational decision made by management. During this outburst, you made anti-Semitic remarks in reference to the company’s owners.
A number of witnesses gave evidence at trial, including the Human Resources Manage and the private investigator.
The Trial Judge discussed credibility of the various witnesses. With respect to the HR Manager, the found that she was a credible witness. The Court however noted as follows:
My greatest criticism of [the Human Resources Manager] was the fact that, as the Manager of Human Resources, she had received a very serious allegation about [the plaintiff's]misconduct, and she chose to not conduct any investigation into the truth of the allegation. She did not arrange to speak with any of the men who had apparently heard the remarks; she did not tell [the plaintiff] what he was alleged to have said; and she did not ask [the plaintiff] if he had made any anti-Semitic remarks.
The Trial Judge then commented:
The case law as to the extent of an employer’s duty to investigate is unclear, but from a practical perspective, the failure of an employer to conduct an investigation into a serious allegation makes it difficult for an employer to later prove the allegation in a courtroom, as is obvious in the present case.
The Court had certain concerns with the credibility of the plaintiff. That said, the Court has significant concerns with the credibility and evidence of the investigator. The Court concluded that her credibility was very poor and that the Court could not rely on her testimony. The Court stated:
I do not accept any of [the investigator’s] evidence regarding the alleged misconduct. Specifically, I do not accept her evidence as to what was said to her by other employees, what the situation was on the plant floor that day, what she told [the Human Resources Manager] and [the General Manager], when she told it to [the Human Resources Manager] and [the General Manager], or what firsthand knowledge she had as to [the plaintiff's] conduct.
The only evidence the Company had about what happened imploded. The Court observed that “as a practical matter, it was unwise for [the Company] to terminate [the plaintiff's] employment without conducting an independent investigation in order to assess the validity of the alleged misconduct. Further, it would have been prudent for management to confront [the plaintiff] with the allegations and give him an opportunity to respond.”
The failure to investigate was fatal to the case.
There was no just cause in the circumstances, and the Court determined that the plaintiff was entitled to a reasonable notice period of 12 months damages. The Court dismissed the claims for Wallace damages, aggravated and punitive damages.
The lesson from this case is clear - it is imperative that employer’s thoroughly, completely and promptly investigate allegations of misconduct that come to their attention before reaching a decision to terminate for just cause (the “capital punishment of employment law”). Testing the veracity of the evidence through careful planning and a thorough investigation avoids mistakes and second-guessing. It ensures better decisions, and provides a basis for defence if challenged.